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Barfoot & Thompson's median selling price now back down to where it was 12 months ago

Property
Barfoot & Thompson's median selling price now back down to where it was 12 months ago

The low numbers of homes being sold in Auckland are finally causing prices to fall, according to Auckland's largest real estate agency Barfoot & Thompson.

"While prices invariably fall as we head in to winter, June's results confirm that prices are definitely falling," Barfoot & Thompson managing director Peter Thompson said.

"Monthly sales numbers have been below the previous year's numbers for nine consecutive months, and that is finally having an effect on prices," he said.

Barfoot sold 855 homes in June, down 313, or 27%, from 1168 in June last year.

It was the lowest number of sales the agency has made in the month of June since 2010.

The median selling price was $840,000, which is virtually unchanged from the June 2016 median of $839,500.

The median price has fallen for three consecutive months and is now $60,000 lower than the record high of $900,000 achieved in March, suggesting that falling prices over the last three months have wiped out all of the gains achieved over the past year.

The average selling price was 913,606 in June compared to $942,717 in May and its record high of $968,570 in March.

The average selling price was $913,606 compared to its record high of $968,570 in March and only $5000 above the June 2016 average of $908,343.

This suggests the days of capital gains in Auckland could be over and property owners could be looking at declining capital values.

"What is positive for the market is that prices are edging down rather than falling rapidly, and at current prices still represent a good outcome for vendors," Thompson said.

There was also a slowdown in the number of new listings the agency received in June, which dropped to 1570 compared to 1734 in May and 1770 in June last year.

However inventory levels, the total number of listings the agency had available for sale on its books, remained high at 4297 for June almost unchanged from 4298 in May, but well up on the 2936 homes Barfoot's had available for sale in June last year.

It was the highest number of homes Barfoot has had available for sale in the month of June since 2011.

Some vendors have been taking their homes off the market rather than accept lower prices than they had been expecting.

That total listings have not risen as sales numbers have fallen is because some vendors have taken their property off the market," Thompson said.

"Taking property off the market when prices are not rising is a common trait in Auckland and will contribute to prices remaining stable through to September's election," he said.

Barfoot Auckland

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160 Comments

Barfoot and Thompson, you have joined the list of commentators here that are just talking the market down! Until now we could at least take comfort that Auckland was special and lower sales don't cause lower prices. Next you'll be telling us the best suburbs aren't immune!

Comments like "That total listings have not risen as sales numbers have fallen is because some vendors have taken their property off the market" and "prices are definitely falling" are really unhelpful! Remember deny, deny, deny!

You must continue to polish the turd that is the Auckland market and refer to the election more. Something like "prices will go higher again after the election because election is election and market is election". Or maybe "prices will rise after election because 'merica's cup and election". No, it doesn't make sense to me either but for goodness sake get your cheerleading pom poms on again! If someone didn't know any better they might get the impression the market is toast.

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Your comment appears to be one of both denial and blame shifting that Auckland house prices were over- priced and that some market correction was obvious.
The reality is that the only positive driver of prices left is the high levels of immigration and that there is a raft of negative drivers including; the likelihood of increased mortgage rates, banks tightening on lending interest only and consequently higher mortgage costs due to principal repayments, the uncertainty associated with the September elections, the realisation that property prices are over valued and therefore discouraging investors, properties unaffordable to FHB, the onset of winter, and so on . . . . The market is not being talked down by Barfoot and Thompson, they are simply reporting on it, so stop blame shifting them and accept the reality of the market.
Look to continuing falling prices over the winter, accept that that the property party is over, prices have peaked, and that in the foreseeable future there is more likely to downside rather than upside.

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Your sarcasm detector is well overdue for a service. I have commented at length on this website about Auckland's overvaluation and the drivers you mention. B&T have regularly obfuscated the reality of the market along with other mainstream media thus why I am being sarcastic.

I expect a significant fall in Auckland prices, at least 20-30% in real terms. Over what time frame depends on a number of factors.

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Zombie you can't have read Davids article on Auckland as a "International City" now & everything is different now The sun will shine forever more

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I think Zombi Ponzi was being sarcastic. The clue is in the handle.

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I love your work Zombie. I can't believe they've surrendered so easily. It must be to keep their sellers realistic otherwise the market will stall more severely. It's actually better for them if it drops with lots of sales than stagnate with very low sales.

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B&T need to hire Zach & DubleD kings of spruiking
Might add a few YouTube videos too about how you never sell even when you're losing value

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LOL we're the Kings of Remuera & Epsom Real Estate Register ;-)

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That's my boy DubleD !

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Housing shortage.

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...means very little when it all hangs on the belief that houses will always go up!

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Where I live on North Shore sales volume down 25% on 2016 and average sales price down 4% over June 2016 in a market where the top end is selling most...Interesting this area has been affected more than most by a certain demographic "investing"....

And in median price all last years gains erased - 2016 = $839,500, 2017 - $840,000

I wouldn't want to be highly geared with Neg cash-flow on my "investments" in this market.

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ouch! $40k lost if you bought 6months ago... not very good if you were speculating!

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And we know from Govt data that at that time 40%+ of all transactions were for "specvestors"...

There must be a bunch of people topping up the mortgage on their rental each month holding on grimly rather than realise a smallish loss......could get alot worse when they all hit the market at the same time.

I know SO many of these people - driven by nothing but the thought of easy money (greed and FOMO, and at the time the banks were happy to help......you couldn't talk sense to them as "property will only ever go up" and so and so made x dollars in the last 2 years"

Well it may... but it doesn't do it in straight lines and there are large amounts of real debt attached.

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Mvgsmf have to agree
Whole streets in the NShore changed demographically & it will have asocial consequences well into the future.
Go try and collect shellfish around Auckland merely one consequence
Of course there's now excellent connections for pseudo ephedrine pills & Auckland with its coming of age as a "International City" can now enjoy money laundering at full tilt
All comments are based on facts

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If only you could alternate between selling houses and cars. The latter is going gangbusters and volume is high.

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I expect that will slow considerably, if house values start declining.

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Both are connected at the hip bone of how wealthy the punters feel. Remember those famous words from Glengarry Glen Ross:

"You drove a Hyundai to get here. I drove an eighty-thousand dollar BMW. THAT'S my name.'

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secondhand jap imported BMW doesn't count!

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Of course. New, bright, and shiny is important for self esteem triggers. Used BMWs imported from Japan are cheaper and have less depreciation. Far more utilitarian.

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I think the question on everyone's mind is what goes up in value when houses go down. I'm guessing cash is king. Any publicly listed NZ pharmaceutical companies that specialize in antidepressants? :-/

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12% of all NZ-ers are already on antidepressants.
Arroll B, et al Primary Healthcare 2016

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True, the housing markets been pretty depressing for first home buyers for a while now. A good dose of rational, fundamentals based market decisions might be just what the doctors ordered right now.

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They're the same thing for an increasing amount of people... progress sure is a strange thing.

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if barf & thompson are saying this it must be their commissions are getting to dangerously low levels to justify the fourth porsche.
So time to put up the exit signs and charge admission ...

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Hammer hits nail.

Watched the 2008 slow down up close at one of the larger RE shops. Owners were pumping "get listing at all costs" followed immediately by "talk the owners price expectations down". RE firms like any business live on a regular amount of revenue. Low sales volume is death to them as they have little in the way of annuity. Would NOT want to be a supplier to any RE firm at the moment. Ill bet that all suppliers are getting the "drop your prices by 20% or your fired" speech right now.

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They don't care at what price they sell, as long as they sell!
Spoke to an RE agent yesterday, who absolutely rubbished all these valuation websites. "the market has moved, and these computer algorithms are not keeping up! Vendors expectations are unrealistic!"

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Agree... I have a RE mate who had a seller adamant they needed to sell for $150k (20%) above a realistic market value based on what they saw on some of these sites and an assumption theirs was better. The nature of the beast is that with rolling averages rolled into these algorithms, they do take some time to react. Either up or down.

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Oh the silence of an Auckland auction room. Can I smell something fearing?

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OMG this is for real :-( Nevermind Cowpat we are still happy neighbours :-)
"This suggests the days of capital gains in Auckland could be over and property owners could be looking at declining capital values."

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Always a happy neighbour. I miscalculated the number of monthly sales. Need to reset parameters. Appears that we are in the denial stage, awaiting the end of year bull trap.

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This is just fake news.. Go out and buy a house, it's been a better time to buy and in 7 years it'll double in value. Trust me on this one!

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When they say "Trust me on this one". It's time to be very afraid.

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sounds like the talk of a shoe shiner!

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Re Chairmanmoa

It might well double in X amount of years, but if the value goes down even further over the next 12 months, then the value might more than double within the same period of time. So why would you buy now if you don't absolutely need to? Because you just want to give money away?

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After I read "International City" I read "Falling Prices"
How can this be ?

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Because the prices are flattening not falling silly.

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Thanks DubleD I knew you'd provide me with advice

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I suspect the property market sale prices will go more slideways like last time (GFC). I, like others cannot believe the lofty heights the market reached, it is rather odd indeed. The numbers are beyond reach for many,and in theory they don't always add up, but just the other day when I commented to an agent on a sale in the local neighbourhood, I was informed that the purchaser was off-shore and purchased sight unseen and is after many many more - certainly makes for interesting times. Especially if people are getting ready to line up again to invest money in the money laundry machine that is the Auckland property market. It seems the party isn't over with those with more money that all of us combined
President of Property

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There's a lot of talk of illegal banking getting money out of China. No doubt the Party will be working on tracking down whoever is involved and there will be prison time or reeducation involved.

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Organ Repatriation

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Hopefully they haven't rehypothecated their internal organs or there will be multiple claims.

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Wonder if they saw the family featured on Harcourts' facebook yesterday. Bought their first straight off the plane, planning to buy more. Not sure that's allowed under The Party's rules anymore.

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The internet response to that idiot agents trophy page was priceless.

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Was it on their national page or a regional one, I'd love to see it.

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Was out in Boganville.

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Until recently, a home owner in china can re-mortgage their home with multiple banks. Now they have better reporting in place.

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So you could mortgage a house for more than it was worth?

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Easily. Look at ANZ lending money based on a pile of nickel as collateral. Too bad that $305m pile of nickel wasn't owned by the person borrowing the money.

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Basically Yes. some re-mortgaged their home up to 5 banks.. it's well reported on all Financial and Business news.

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During the GFC Auckland house prices did fall off highs
I know because Devonports best homes suddenly were 100K less the previous asking price.
There were City apartments to burn at clearance prices
I think Auckland is a great place to buy property for all sorts of reasons but I think we are witnessing a change in sentiment and the level of that change is not fully apparent yet

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"Buy land, they're not making it anymore." Mark Twain
Read more at: https://www.brainyquote.com/quotes/quotes/m/marktwain380355.html

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They're not making oil any more either (on a human timescale), but the price has still halved over the last few years. Sometimes reality is more complex than soundbites.

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Twain's investment record makes the statement a bit suspect.

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He lost a bundle in mining investments. Twain's definition of a mine: A hole in the ground with a liar standing next to it. That works for some housing developments too!

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Yes, well aware that house prices tend to rise over the long term. Plenty of down cycles in the real house price series there, too. What's your point? You'll need to do significantly more to show that housing from this point will be a better investment than alternative asset classes, or even that buying a house will be more cost effective than renting in the near future.

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Mark Twain also wrote;
“There are two times in a man's life when he should not speculate: when he can't afford it, and when he can.”

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You clearly missed yesterday's unitary plan decisions that did just that - made more land (available)

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So if i'm really cunning i will wait until prices reach 2008 levels and jump in and pay 2008 interest rates.I recall i was getting around 7.25%,so mortgage rate?

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yeah but Id rather have less real debt at a higher interest rate any day....

I remember I had $500k on deposit at over 6% return back then with zero hassles attached....it all seemed all so easy...and then...

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At some point, Auckland's falling real estate sales will affect the wider economy, which will only reinforce a decline in prices, initially in Auckland then thru New Zealand. As this takes hold , the drivers of Auckland's regional growth will reverse and prices will fall further. Anyone that has purchased in Auckland in the past 18 months , already will be looking at a loss on sale. Failing to sell now will only incur larger losses later if a sale becomes necessary . Year on year Barfoots has already seen a 90 million dollar fall in commissions . .

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@Cowpat we are both in it for the long haul. It doesn't matter where the market is heading in the next 10-15 years we'll be good neighbours.

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@DGZ Don't forget Grendel!

Us 1050s need to stick together!

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Surely you're not 1050. Maybe the non-DGZ part?

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You know what they say "money doesn't buy you class, but it can buy you Double-Grammer Zone"

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LOL that's very true when you think about it!

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I know what I am and I accept that =)

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You are my neighbour, thanks for accepting that.

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Oh I never doubted you were DGZ. To be fair I really like our neck of the woods.

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Of course we love our neck of the woods - guess who visited last night for dinner?
SBW among AB's out to dinner in Remuera DGZ
http://www.nzherald.co.nz/sport/news/article.cfm?c_id=4&objectid=118859…

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Your such a name dropper and thats not a good thing.

NZ is such a small place plenty of people know people, but NZers are all about being down to earth and not being noters. Heres a classic example of how cool some NZers are, and how they keep it on the down low.

http://www.nzherald.co.nz/sport/news/article.cfm?c_id=4&objectid=118861…

"I always play being an All Black down. I was so honoured and privileged to be within that group and to earn the jersey, but I never really speak about it.

Maybe it's because I don't want to blow wind up my bum... I just want to leave it as it is."

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That was the title of that article in NZ Herald. The name wasn't dropped by me.

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OMG ! You mean you actuallly class yourselves on your street numbers ?

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postcode mate -- 1071 - ftw! lol!

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Cowpat if a declining Auckland property market effects the wider economy, what will the Reserve Bank do to the cash rate? Will they raise rates to crash the economy or will they cut rates to try and stave off a recession? If they make the logical choice and cut rates to preserve their employment, what will this do to property prices around NZ? What will property prices do in Wellington or Dunedin if 1 and 2 years mortgage rates have a 3 at the start? Your statement does not pass the real world logic test, though it may do well in a year 10 economics essay.

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Sure the RBNZ will drop the OCR, but what if other countries are raising rates at the same time (as they appear to be), and banks can't get enough local deposits?

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also they tried QE in the states during the recession, and houses still took a hammering

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Mja , I am home from kindy, crayons have been put away for the day. I discussed your comments with my other more studious kindy goers whilst lounging on bean bags and throwing jelly beans. We were all in remarkable agreeance ( although there was disagreement on the use of agreeance ), that if mja returns in 2, 5 and indeed 10 years and revisits the free opinion above, he/she will wish that they had taken the advice of a piece of shit . (note to ed- not an offensive comment , as relates to self )

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@Cowpat my neighbour, are you attending Vicky Ave Primary?

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Cowpat, why would I wish I had taken your advice when I have no financial interest in the Auckland property market. Just pointing out that your argument is simplistic, the market is multi-factorial and not linear. The Auckland market has had the rush to beat late 2016 new LVR restrictions froth knocked off it, but the anomaly is that Auckland listings have fallen over the last 4 months on trademe from 11300 to 9950. Wellington listings have fallen from 2050 to 1600. At GFC bottom Auckland had 18000 listings and Wellington 4500 and at this time Harcourts refused to use trademe (as they were pumping realestate.co.nz). So if price follows supply/ volume then Auckland prices should stabilise and Wellington's slowly increase. Because, despite all the doom and gloom the stock of properties for sale is falling, some are being withdrawn from market, but the majority appear to be selling. And future supply from spec developers is about to drop off a cliff, and the population continues to rise.

The other factor is that if the reserve bank wants to stabilise the market with the stroke of a pen they can remove the LVR restrictions. If 12 months previously you had said that with an 80% owner occupier LVR and 60% investor LVR nationwide, Auckland properties would be at the same level and prices continuing to rise around the rest of the country except for Christchurch, most commentators on this site would have said you were dreaming. This market is incredibly resilient and has defied all bearish prognostications. Note I consider the 5% fall or so from peak simply erasing the gains from the scramble late 2016 to use bank pre-approvals before they expired and would then become subject to tighter LVR restrictions.

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1/ There is no GFC at present
2 / Comparing the present to the nadir of the GFC for Trade me listings is of doubtful rationale.
3/ Auction sales for Auckland in June were 36 percent.Using Barfoots their current rolling 3 month churn rate is 48 percent.The past 3 months have seen 4596 new listings, only 2405 sales, yet end of month listings moved by 1. Shadow inventory is rising . Trade me listings can rise explosively. (see Toronto ) Barfoots June sales this century have only been lower in 2008 and 2010, yet among other factors we have record migration. At present Barfoots has 5.3 months of inventory available on a 3 month average. There is no present shortage of listings in Auckland.
4/ A rising population/(demand) did not prevent Dublin house prices falling 55 percent.
5/ Using the REINZ / Barfoots data,43743 Auckland homes have sold since November 2015. That is about 8.5 percent of all Auckland housing stock, REINZ HPI for Auckland is up 1.8 percent y/y. Barfoots June 2017 prices are lower than October 2016. Almost all of these purchasers from November 2015 after transactional costs would suffer a loss if selling today. The margins always matter.
6/ Since March 2008 median prices in Auckland have increased by $475000. At the same time the central bank cut the OCR from 8.25 to 2.5 percent. At present the OCR and mortgage rates are at historical lows.Australia/China and earthquakes 'saved' New Zealand economically from 2008. Who knows.
7/ Nationally 40-45 percent of all new mortgages in 2016 were interest only. What percentage of these were Auckland based would be eye watering. There is 'no' financial engineering in New Zealand. 'Investors' accounted for 45 percent of the Auckland market. The basis for the 'investors' was that Auckland prices always rise. The Economist puts New Zealand at the top globally for price/rents stupidity , that is on a national basis not where it matters - Auckland. Yields matter when there is no capital growth The Economist puts us top in terms of price/income as well - who cares.
8/ Nationally we have 236 Billion in mortgage debt , 129 Billion in Auckland, 67 Billion in interest only mortgages. Mortgage debt is up 60 Billion since January 2013
9/ The Reserve Bank can cut interest rates. That will be interesting for currency traders and inflation. The banks can give out grocery vouchers and Ipads. It will not make any difference to mortgage rates. The Reserve Bank can do what it wants, it cannot make an individual purchase a property, in all honesty it did not want Kiwis to borrow so much , unfortunately we have, and we will face a balance sheet recession down the track. Better to have it now. Canada raises interest rates next week. No one saw that occurring one month ago.

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I'm of the opinion that Auckland, Tauranga and Hamilton property is overpriced. However, Wellington and Auckland listings have been falling the last 3 months, and the population of these cities is growing so falling property prices is not necessarily a one way bet. In a world marred by terrorism, extremists and environment damage , NZ may be the equivalent of a gentrifying suburb think Ponsonby in the 1980s. Now the price of property may fall in a gentrifying suburb at times, but it tends to plateau before the next rise. New Zealand may be transitioning from a backwater to a desirable part of the world to live in hence property prices have moved to a new metric.
Now, New Zealand is over due for a recession. But from my GFC experience 90% of the population keep their employment, and 2/3s of these peoples income does not fall. If New Zealand enters a recession interest rates will fall, the government will want low rates and can engineer this outcome. So in modern recessions about 2/3s of households maintain household income but suddenly find their mortgage costs less and many items are suddenly on sale. So for every household that has difficulty, approximately two households find their disposable income has risen, though given the prevailing fear they tend to up their savings/ pay down debt.
The other point is that the typical recession leads to a 33-50% decline in the share-market. Now where will people who were burnt by finance companies and subsequently the share-market decide they will put their retirement funds? I would bet a significant amount of this money will go into property, as even in a recession residential rent levels tend not to fall. And if I was put in cryogenic suspension for a 100 years and had to invest funds into assets that I hoped would still have value in 2117, it would not be bank deposits, or shares, it would be in houses in leafy suburbs of Western cities.

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If they drop rates, all they are really doing is delaying the inevitable. Also as a result they could make the crash occur at a bigger scale. IMO the should have been raising rates earlier, especially now that milk prices have improved. It was the declining milk price that appears to have partly led to the last drops.

But the trend does still seem to be a dropping rate, as banks are still dropping deposit rates to savers.

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mja, that's the smartest comment of them all and not a single thumbs up

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MJA so you think NZs interest rates are controlled just by the RBNZ ?
If interest rate sentiment is UP elsewhere in the big wide world of banking there's less relevance in what the RBNZ does
NZ doesn't operate in a closed economic environment
It's banks are predominantly Australian owned for a starter
Also add in the Bank of China

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I'm not convinced interest rates will rise around the world, there is minimal inflation and wage growth. Retiring baby boomers is disinflationary, as they move to lower incomes. Every years solar power becomes more efficient and at present rate within 2-3 years the all in cost will be less than using natural gas to generate electricity, this is disinflationary. The all in cost of robotics per human hour equivalent is $28 US and by 2020 is projected to be $20 US. So we are at the tipping point where to many businesses robotics is becoming viable, in a world where energy is becoming cheaper and vehicles are going electric. I don't see a lot of inflation in this world, I don't see a lot of wage growth for the low to medium skilled, so I see low interest rates throughout the Western world going forward.

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It'll be interesting to see how foreign owners (in their many guises) react when the news reaches them that the party is over. Especially if the NZD continues to weaken against the greenback.

An RE connection in CHCH says an increasing number of investors are demanding a credible tenant in place or committed to moving in, before they will buy. Another couple we know down there recently renewed their lease and were astounded at the efficiency, pleasantness and accommodating attitude from the property manager - in stark contrast to the arrogant and patronising approach from them of recent years, when supply/demand was out of balance. The market, when she delivers, is a beautiful creature.

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The market is not delivering enough new homes in Auckland
All we hear are politicians promises

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Don't get the hysteria some commentators seem to promote on here. You'd think this was the first time you'd seen house prices go down.

Even as an existing home owner in Auckland I'm happy - good opportunity to upsize our family home in a depressed market.

There are clearly a lot of people holding back from purchasing (including some of the commentators here) - once you see value you'll purchase. And the cycle continues..

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There is hysteria from those who are denying the prices are going down. All people should be doing is changing strategy to suit the market, rather than ignore it. Seems pretty straightforward to me.

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Dictator It seemed pretty straight forward to me too
Foreign buyer willing to pay me 2.5X what I paid I don't look a gift horse in the mouth I say OK deal
Many Aucklanders have simply moved to Tauranga or like me overseas.
Now it remains to be seen what transpires

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WMC, very wisely said

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Okay , this fall in prices or "market adjustment" is good news , but is it for real ?

Prices have tested a ceiling , and come back ............ thats normal

But

- Its winter
- Banks have tightened lending simply because there is a limit to what people can afford
- There is an election in around 80 days time
- Who knows where immigration is going to end up

Problem is National will keep immigration high , Andrew Little says he will not change the settings , so, irrespective of who wins , expect demand to be very high in due course , pushing up prices again .

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Some interesting comments in the news coverage:

This exceptional performance of the property market in 20xx reflects a variety of somewhat unique factors, notably ...exceptional immigration figures, the highest ever on record; stronger than anticipated employment growth; and perhaps the feelgood factor brought about by the stability of the interest rate environment, despite predictions in late 20xx that rates would be increasing in 20xx.

and

The strength of activity and in particular price inflation is probably music to the ears of existing property owners. However, such activity in itself does beg the question, how much longer can this last? To address this one needs to look at the factors driving property demand, principally population growth. All in all, the evidence appears to point in one direction - strong steady demand for the foreseeable future. Our young population, overall population growth, and strong economic performance will mean that demand for homes and the value of those homes will be sustained for many years to come.

Oh, the source, of course.

Turns out it was Ireland, before the bubble burst.

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In the case of the Irish bubble pop, the impacts on migration (em- and im-) were tangible.

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Ireland, had an overbuild with excess housing stock. Jump on youtube and have a look at the half built housing estates and abandoned new housing estates, similar to the US during the GFC. New Zealand has a housing shortage, so not really comparable.

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Price rises suggest increased demand to supply ratio is high or not enough houses and too many buyers. In this case before the irish crash occurred you might have said the same thing. Is it possible with sudden turn around in immigration we might also have an overbuild? Is it possible a reduction in available credit may lead to a down turn in housing market and therefore the economy which causes a mass exodus, further compounding the problem?

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I think your second point "banks have tightened lending simply because there is a limit to what people can afford" effectively contradicts "expect demand to be very high in due course"...

Current prices are not supported by fundamentals and we know what tends to happen in that scenario.

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Well if you think about it Boatman when did auction sales start to fall? Answer at the start of this year.
When did China's capital flight restrictions really kick in? Answer at the start of this year.

And yes it is for real but the main difference is that and the GFC, is we don't have the top end buyers to bail us out anymore.

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No no no. We all know the Chinese buyers only represented 3% of the market.

We know this because the government told us so.

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And as the Todd Barclay affair shows, our politicians - especially the most trusted ones - never lie to us.

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And now the heat is off, because they are gone, called home by their masters, we will no longer feel the need to dig deeper into the statistics (that LINZ them very selves declared were not comprehensive) to find out just exactly who more than 30% of those buyers truly were. In other words, people here on student or working visas and foreign trusts fell into that category. NZ CHOSE not to count these people, whereas in Australia and Canada they were. These figures were then used as gospel by the government knowing that so many people would never bother to look further than the headline.

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Boatman,

last week,you claimed to have a detailed knowledge of the banking system,yet had no idea of the banks' WACC. Now,you claim that the banks have tightened lending because there is a limit to what people can afford,but almost immediately,you then claim that very shortly,demand will push up prices again. The two statements are incompatible,though this has clearly escaped your razor-sharp intellect(irony intended).

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Boatman yes it's a waiting game to see what ultimately transpires but don't forget ability to pay the mortgage/s
Don't forget there's nowadays lots of homes held by foreign nationals which has never been the case to this extent ever in our history

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Don't forget RE companies aren't always bulls on high prices working for the vendors, they have to go with the flow and there pay check, they need sales not only listing, if the sales are coming from people with less money , the buyers are now there new mates,

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Yes, this is the real motivation for B&T, they are trying to reduce sellers expectations so they can get more commissions.

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Interesting! Do go on? What might this tell us about the market then? =)

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My neighbour Grendel why don't you come over and I make you a cuppa then I will tell you all about the market.

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?? DubleD so you are going to tell Grendel "All about the market " ?
You who is holding property investments that you failed to sell and take profits on at market peak ?
Hilarious !

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That's an ignorant comment NL, I doubt very much that you own properties

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Grendel, no one is denying that the market is cooler than it was. However Auckland being Auckland simply responds to this by battening down the hatches and sitting tight. Obviously that's not good for Real Estate agents!

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Keep holding your declining portfolios guys !

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NL, how many years experience do you have owning investment properties ?

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Spot on ZS, yet not a single thumbs up

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I'm surprised it has taken you this long to work out the difference between a Sellers' Agent and a Buyers' Agent.

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By the way you can't buy in Nth Am without a buyers agent unless you use a lawyer directly.
Buyers agents want the sale as much as the sellers agent so really nobody gains a commission without the purchaser who thus is ALWAYS compromised

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The ponzi scheme is coming to an end. This investment bubble (which plainly it is) is driven by the creation by banks of mortgage credit. Even the banks have now realised that they cannot continue to create credit on the scale that they have. More to the point, they are coming under pressure from regulators and counterparties to get their houses in order (ie recent credit downgrades). House price increases are directly related to the increases in household debt, both of which are unsustainable. And our banks (ie the Aussie banks) are at the same time hugely exposed to the biggest credit bubble in history (the Aussie property market). We have made a massive mess for ourselves, and I struggle to see how there can be good outcome to this story.

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Makes me laugh someone commented the other day , investors speculator started this boom, and overseas investors jumped on for the ride, when have you ever seen speculators start a boom, wasn't 2008 to 2013, investors and speculators normally jump on for the ride when they see capital gains, even the other day the government and RBNZ said the LVR, were working with still no mention of the restrictions put on overseas investors having anything to do with the slowdown, they'll use this line one day if prices go down to far, WE ARE THINKING OF EASING THE LVR limits because they have done there job, because one things for sure the fools can't drop interest rates to help a falling market because they have everything back to front, vote for anyone but not national, come on with a head the size of John keys all he had to do is hang on for a little under a year to take his party into a 4 term, he's very bright and a ex banker and he bailed, the bad news about housing and debt and just how big this mess was about the same time he left, voting for national would be voting for greed in the hope bill English could fix this, what did English get last time he was lucky to be made PM was it 20% , but now he's 50 , yeah right

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The only downside if National is not re-elected and the housing market implodes is that someone else will bear the brunt for a problem lovingly nurtured by nine years of Key, Smith and English.

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One of the best parts of the PM's job is getting around the country and talking to people about their ambitions and concerns. Yesterday Bill was out and about in Auckland meeting with various ethnic communities. While these communities might be different from each other, they all want the same things – jobs for them and their children, a place to call home, opportunities and support and ultimately to make New Zealand a better place. National will work with all of our communities to help them achieve that.

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God bless them. Based on their track record over the last 9 years, everything you have said is true.

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"National will work with all of our communities to help them achieve that."

Most hilarious and ridiculous comment of the day. Congrats!

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Bill English PM ? Is he the guy who fiddled his housing allowance ?
Some character

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He's the one who doesn't pull ponytails.

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Unfortunately, those are the very things Bill has been failing them on.

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Nz didn't get hurt badly at all the time of the GFC , of course the lift in house prices were a period of time the hole world was doing great, since then 20 years of China growth with Australia a big supplier has ended plus other countries, trouble everywhere, bright sparks saying we will never let housing ever get out of control like that again, hello here we are and many countries doing the same, 2014 to now was and is false and stupid and because of this we will be lucky to only drop back only 30% to the 2007 highs , that should give home owners hope, they were good times for all

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Reader recognises relocated red-zoned villa in Queenstown
https://www.stuff.co.nz/life-style/homed/houses/94332012/relocating-red…

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This bubble has been caused almost exclusively by speculation substantially fueled by chinese money. That is over!

Forget immigration numbers, we have just had the highest numbers on record and houses are not exactly flying off the shelf.

The Auckland properties are on average 20-25% over valued, Im picking the correction will end with the average being somewhere around the $700,000 mark

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Chinese buyers/money only represented 3% of the market okay?

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Yeah pull the other one it's got bells on it. :P

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Ponytail?

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Wasn't that Mr Key's fetish?

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CJ099 It made Mr Key World Famous !

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@thegic: Yes it's not surprising that all the main gateway cities such as Auckland, Vancouver, Sydney and Melbourne have all been massively inflated by Chinese money. Now that the breaks are firmly applied by their Government, this leaves most of these markets high and dry especially Auckland due to lack of infrastructure and being so far away.

I recon by the time the market has bottomed out in the next year or so we'll be looking at an average Auckland home value of around $550 to $600k because that's what is affordable based on average incomes for Auckland.

Bloomberg article: Hong Kong Retains Title of World’s Costliest Home Market
https://www.bloomberg.com/news/articles/2017-01-22/hong-kong-tops-surve…

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Make it $100k

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CJ099 Remains to be seen what price level Auckland house prices lower to but I agree with you the spruikers are not factoring in the utter property speculation of Chinese nationals who aren't using Auckland property for housing purposes

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Why do you care NorthernLights? You don't even live here. Same goes for all the non Aucklanders. Why don't you all just concentrate on your "own neck of woods"?
The real problem is that people are doing such a poor job in their local areas. No one wants to go there and many are dying. I would love it if some towns around NZ could get energized, become thriving and unique folk communities. Maybe some day in the future people will flock out of Auckland in search of the utopias found in small towns. Or the small towns will conquer the great city in a way? Get to work instead of complaining about Auckland all the time I say.

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That's why I just said make it $100k and shut them all up

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So are you now back to predicting at 50% property crash DGZ, because that's what would happen if average AKL prices dropped to that level. Though I wouldn't rule out an average price around the $500k mark judging by that recent report on Auckland's medium wages.

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ZS, com'on you know it's far easier to complain and whinge than actually do something

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Pretty sure people are not whinging now. Its the ones who see values starting to turn, that wont be happy.

As for complaining about things, I complain all the time, but Im having a crack trying to start up a scalable business that could be global, it may go down in a ball of flames though, but Im having a go. I suspect a lot of people on here have a go, but maybe not in property. Houses for them are places to live, so capital gains mean little as long as the next house you upgrade to is consistent with the price at that time. So for me cheaper is better.

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Hear here ;-)

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@NorthanLights. Yes and I wonder how long it will be before this starts happening here: Article South China Morning Post:-

In landmark ruling, Vancouver homebuyer is ordered to repay millions to China’s Citic Bank

http://www.scmp.com/news/world/united-states-canada/article/2073272/lan…

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lol

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House prices in Auckland fall. People have been buying houses for LTCG which now may no longer be forthcoming. Back to basics - buy on yield and if there is LTCG then treat that as a bonus. Central city freehold apartments located near the sky tower and CRL can still be acquired for 8-10k per m2 and are providing the best of both worlds. No shortage of tenants in a city choked by congestion with imminent rises in fuel and tolls and increased parking charges and longer commutes. New freehold apartments are selling for 13-15k per m2. Think about it - does a new apartment rent for twice that of a spruced up 10yo apartment? Of course not - the sweet spot has some history to prove it is water tight and the yield is so much better! New apartments come on stream - so what - their expected return will be hampered by the increased construction cost and increase in building materials. Banks are also going to prevent a glut of apartments - why would they want a glut to reduce the value of their assets?

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Modestwhisp how inspiring ! Do you work for CitySales ? Maybe family ? Ha!

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No just think it is time for people to revisit the age old value of logic and what makes sense. Do you see a drop in rent on the horizon? Do you see significant investment is the CBD that is going to provide for additional value in the short to medium term? I view properties like shares - either buy for yield or LTCG. I believe these types of properties deliver both. I want these types of properties to go up so when I get my new council valuations in Nov 2017 I have new equity to draw on to buy more of the same. I believe the worm is turning and CBD is going to be the place to be.

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Logic and property investment....pretty sure any of the usual rules of investment and return went out the door some time in the mid 2000s, and have got crazier since.

Domestic speculation is all about tax free cap gain, and income tax minimization as preached by the property seminars for the last 15 years. Low sales and slight pricing decline will continue till the election. If Nats control power and reopen immigration flood gates, and pander to overseas take over of NZ then more of the same. If they dont and immigration/overseas ownership limitations, tax loss ring fencing are enforced (as promised), then a return towards reasonable price/wage income rations will get underway and a specuvestor blood bath will start. May take a few years a fixed loans ride through but leverage is bidirectional.

Also consider that chinese money is not stupid -if prices start to tank and they all look to bail out at the same time, high end $5m mcmansions could very quickly be $3m or less. Cycles always show that niche locations rise the most in booms, but decrease during bad times.

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Doesn't bother me I buy for cash flow / yield. LTCG is just a bonus - a well educated guess based on logical outcomes based on research.

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I agree the housing market is very much like the share market in some respects

Company shows potential to grow and provider better yeilds, shrewd buyers buy up and shares go up, after an upward trend speculators join the party wanting to get a peice of the action pushing shares prices up without rhyme or reason. Once the Shrewd realise that the shares are overvalued and yeilds are not going to meet the value of their increased investment, they take the profit. shares stop going up, speculators start jumping ship and taking the profit, shares drop, more jump off then panic selling till share finds its true value again.

You just need to look at the shanghai composite over 2014 & 2015 to see how this can happen

Not too dissimilar to the property market really IMO

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One significant problem is the leveraging that goes on with property..and the fact that people are using a basic human necessity as a means to generate wealth...often to the detriment of others.

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What you have just described is the textbook definition of an investment bubble

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Speed to exit too, don't forget that.

The behaviours and mentality are very troubling, e.g. leveraging to a point where you have to "top up" the mortgage payments. Fine whilst the CG is still happening but in a flattening/falling market combined with rising interest rates, falling sales etc not so much

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If you invested $100 in Bitcoin in 2010, it's now worth 75 millions.. slightly better Capital Gain than a Mt Eden Villa
https://finance.nine.com.au/2017/05/24/13/26/bitcoins-rally-100-in-2010…

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Wow - I'm totally shocked at this..I mean there's zero corruption like this in NZ eh? Only 3% of all sales eh? Dear Sir John told us so....

All joking aside have we ever seen fraud on this scale before by individuals in NZ?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=118…

What a joke we've allowed this to happen - $50M fraud by a husband and wife involving 76 properties over 5 years

Just as well decent NZers didnt have to compete against them for any of these homes....

As this all starts to unravel we'll see we were the patsy at the poker table and have been well and truly played

WAKE UP SHEEPLE

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Toronto house prices have gone down 192k in the last 3 months.

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Toronto real estate set a new mutli-year record, but not exactly one it wants to advertise:-

Toronto Real Estate Sets A New Record…But It’s Not The Good Kind
https://betterdwelling.com/city/toronto/toronto-real-estate-sets-a-new-…

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